Priyanka Prakash is a former Fundera.com staff writer and a freelancer specializing in small-business finance, credit, law and insurance, helping business owners navigate complicated concepts and decisions.
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Ryan Lane is an editor on NerdWallet’s small-business team. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press. Ryan is located in Rochester, New York.
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Rosalie Murphy is a small-business writer at NerdWallet. Since 2021, she has covered business insurance, banking, credit cards and e-commerce software, and her reporting has been featured by The Associated Press, MarketWatch, Entrepreneur and many other publications. Rosalie studied journalism at the University of Southern California and holds a graduate certificate in Quantitative Business Management from Kent State University, where she's now pursuing an MBA. She is based in Chicago.
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An employer identification number, or EIN, is a nine-digit number assigned to your company by the IRS. You’ll use it when filing your business's income tax return or payroll tax return.
Not all businesses need an EIN, but there’s little downside in getting one. Applying is free and only takes a few minutes online at IRS.gov. An EIN also comes in handy to separate your business and personal finances, open a business bank account or apply for a business loan.
Here’s what you need to know about getting an employer identification number.
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ZenBusiness Starting At Read ReviewAn employer identification number, or EIN, is a unique tax identification number for your business. Think of it as a Social Security number for your business activities. The IRS uses your EIN to keep track of your business tax returns, and other financial institutions may ask for it as part of their identity verification processes.
Partnerships, corporations and multi-member LLCs must get an employer identification number to file their business income tax return.
If you have employees, you’ll also need an EIN to pay and file payroll taxes — even if your business is a sole proprietorship.
Certain types of organizational structures require EINs as well, including:
Nonprofit organizations. Businesses that pay excise, alcohol, tobacco or firearm taxes. Businesses with a Keogh plan. Real estate mortgage investment conduits. Farmers' cooperatives. Plan administrators. Certain types of trusts.If you’re a sole proprietor or single-member LLC with no employees, you have the option to use your Social Security number instead of an EIN when filing business taxes. But considering the benefits of getting an EIN , it’s a good idea to apply for one anyway to set your business up for future growth.
The IRS lets you apply for an employer identification number online or by mail, fax or phone. Online is the easiest and fastest way to get an EIN, making it the best option if you’re eligible.
The application process is free, so be wary of companies that charge you to apply for an EIN on your behalf. And if you already have one but have lost track of it, look up your EIN before applying for another.
Follow these steps to get an EIN:
To get an employer identification number online, you’ll need to meet these requirements:
Your principal business must be located in the U.S. or U.S. territories. Your principal business is the main income-generating activity that you do.
A “responsible party” — like the business owner or a key principal officer, general partner or trustor — must have a valid SSN or ITIN.
You can still get an EIN if you don’t meet those qualifications. However, you’ll need to apply via mail, fax or phone. International applicants who do not have a business presence or residence in the U.S. yet must apply by phone.
To complete the EIN application online, you’ll need to provide the following details:
Your business entity type. Your full legal name and personal taxpayer identification number (SSN or ITIN). For LLCs, how many members your LLC has. The legal name of your business and state where the articles of incorporation were filed. Your business address. Primary reason for applying (e.g., launching a business, banking purposes, hiring employees). Date you started or acquired your business.If the business owner or another responsible party is designating someone else to apply for an EIN on their behalf, then they need to fill out and sign Form SS-4 and keep a copy in their files.
If you apply online, you’ll receive your EIN immediately once you submit your application. Click here to start the process..
You’ll have to wait longer if you apply for an EIN by fax or mail. Fax applications take around four business days to process, and mailed applications may take four to five weeks.
You may need to apply for a new EIN if:
Your business structure changes. For example, you'll need a new EIN if you are a sole proprietor and decide to incorporate or take on a partner in your business.
You are subject to a bankruptcy proceeding. Your corporation merges with another one, creating a new entity.If you’re changing the name of your business or opening a new location, you generally won’t need to reapply for an employer identification number.
If you lose or misplace your EIN, there are a number of ways to look up your business tax ID :
Find the computer-generated notice you received when you applied for an EIN. If you opened a bank account using the EIN, contact your bank to retrieve it. Find your EIN on a previously filed tax return.Contact the IRS Business & Specialty Tax Line during business hours if you're unable to find your identification number through other methods.
A version of article originally appeared on JustBusiness, a subsidiary of NerdWallet.
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